Here's the man for vice president

Robert Kuttner

December 19, 1991|By Robert Kuttner

I WANT to propose a Democratic candidate for vice president. He is Jeff Bingaman, the two-term junior senator from New Mexico.

Politically, Bingaman is the right age (48), from the right region (the West); he's a moderate-liberal (ADA rating: 70 percent), who wins handily in a relatively conservative state (63-37 in 1988). Bingaman is a genuinely nice man, a diligent legislator and a clean politician.

But none of this is why I want him on the ticket. If the next administration is Democratic, it needs Bingaman because he is one of the few people in public life who has taken the trouble to understand the connections between America's military machine, its trade policy and our commercial future.

With military expenditures dwindling, the U.S. economy will no longer reap the benefit of massive military outlays for advanced research, development and procurement -- which have been key to past American dominance of so many industries. In the Senate, where he chairs the Defense Industry and Technology Subcommittee, Bingaman has taken hundreds of hours of testimony and compiled thousands of pages of hearings detailing just how military spending has driven technical advances in everything from computers to lasers to aircraft to medical technology.

This is part of an old story -- a largely forgotten one disdained by most professional economists: Long before the New Deal made the government a larger force in economic life, the U.S. government was instrumental in organizing and advancing new industries.

As industrial historian Robert Cohen points out in a forthcoming study for the Economic Policy Institute, in World War I the U.S. Navy was worried that the new technology for wireless communication would fall into foreign hands. So it organized a consortium called the Radio Corporation of America, with the Navy as a 20 percent stockholder. RCA then matured into a consumer giant that literally built the commercial radio industry.

The government also organized the civil aviation industry: It underwrote research, compelled rival aircraft designers to share technology and arranged for the post office to subsidize air mail, so that fledgling airlines could be assured of a market as they gradually built bigger and better planes to attract passengers. This largely occurred, incidentally, under Republican presidents who believed government should promote industry.

After World War II, the government poured large sums into the development of computers, semiconductors and advanced machine tools. It built roads (under the "National Defense Highway Act") that helped guarantee Detroit a growing market for mass production of civilian automobiles. All of this activity produced immense commercial advantages for American industry.

But for 11 years, we have had conservative presidents who insist, nonsensically, that private industry is none of the government's business and that when government intervenes it can only make things worse.

Last week, Bingaman held another round of hearings. This time, his subject was the proposed sale of 40 percent of McDonnell Douglas' commercial aviation business to Taiwan. The buyer, Taiwan Aerospace, is partly owned by the government of Taiwan and reflects that government's desire to get into the aircraft business. McDonnell Douglas would receive a payment of $2 billion, most of which would pay off debt. Taiwan would get a lot of technology and a lot of production.

McDonnell Douglas is the world's third largest manufacturer of commercial jetliners (after Boeing and Airbus), and America's largest defense contractor. Much of what McDonnell Douglas knows about making planes it learned courtesy of the U.S. taxpayer.

The Bush administration, characteristically, has taken the position that this sale is merely the natural working of the market economy. But in fact, governments are intimately involved on both sides of the bargain.

The administration has refused to use a provision of the 1988 Trade Act, the Exon-Florio amendment, which requires it to review proposed sales of U.S. companies that affect the national security. Bingaman, in a Nov. 18 letter to President Bush, co-signed by 29 other senators, urged Bush to reassess "the administration's trade, technology and foreign investment policies as they affect the future of this country's aerospace industry."

Bingaman has not received more than a courtesy reply, nor is he likely to. For the administration does not believe in policies on technology or foreign investment, and its only trade policy is a largely futile crusade to persuade other nations to respect the free market.

But as the McDonnell Douglas case suggests, no policy is also a kind of policy. When the U.S. government refuses to develop criteria to identify what serves the national interest, our fate is determined by the policies of other governments.

The next administration will need to make progress on such familiar and grave economic problems as taxes, budgeting and banking. But it also needs to start comprehending the crucial link between trade, defense, technology and the survival of American industry.